Environmental Law Update provides information on developments in environmental law as it applies to property, probate and trust matters. The editors of Probate & Property welcome information and suggestions from readers. This issue's "guest columnist" is Rafe Peterson.

Recent Decisions Roil the Waters In Wetlands Regulation

Wetlands regulation continues to be a major concern for the real estate development community. Those who have dealt with this issue know from experience that the presence of wetlands on property can create myriad complications, often resulting in substantial delays and necessitating changes to projects. Indeed, even determining if regulated "wetlands" exist on property can be a difficult task, especially in nontidal areas, where "how wet is wet" can be anything but obvious.

Nonetheless, considering the penalties that can result from an illegal filling of a regulated wetland--ranging from site restoration to fines to jail time--practitioners must make it clear to their clients that they must consult the Army Corps of Engineers (Corps) and relevant state regulatory agencies if there is even a remote possibility that the regulators will assert wetlands jurisdiction over a development.

Corps Authority Curbed

In the past 12 months, there have been some interesting developments regarding the extent of the Corps' wetlands jurisdiction. In June 1998, the D.C. Circuit issued a significant decision concerning the regulatory authority of the Corps under § 404 of the Clean Water Act (CWA). The CWA requires permits for the "discharge of dredged or fill materials" into "waters of the United States" and wetlands. Section 404 defines "discharge" as the "addition of any pollutant to navigable waters." In 1993, the Corps reversed years of practice by issuing a rule expanding the definition of "discharge" to include "redeposit of dredged material," including "incidental fallback from mechanized landclearing, ditching channelization or other excavation." Thus, for example, dirt that falls from a dredge bucket when it is lifted from the water, or soil that falls from the roots of a tree that is removed, would be considered regulated incidental fallback.

In National Mining Association v. U.S. Army Corps of Engineers, 145 F.3d 1399 (D.C. Cir. 1998), a unanimous panel affirmed the holding of the lower court that the Corps had overstepped its jurisdiction. The appellate court concluded:

the straightforward statutory term 'addition' cannot reasonably be said to encompass the situation in which material is removed from the waters of the United States and a small portion of it happens to fall back. Because incidental fallback represents a net withdrawal, not an addition, of material, it cannot be a discharge.

Id. at 1404.

The court said the rule was inconsistent with Congressional intent, noting, "Congress could not have contemplated that the attempted removal of 100 tons of [soil] could constitute an addition simply because only 99 tons of it were actually taken away." Id. The court admonished the Corps that if it wants such authority, "the appropriate body to turn to is Congress." Id. at 1410.

Developer's Conviction Overturned

In another important decision, in December 1997, a three judge panel of the Fourth Circuit overturned the criminal convictions of Maryland developer James Wilson and his development companies on four felony counts of knowingly discharging fill material into wetlands without a CWA permit. United States v. Wilson, 133 F.3d 251 (4th Cir. 1997). In overturning the convictions, the court struck down the Corps' jurisdiction over isolated wetlands because it did not comport with the criteria for federal jurisdiction under the commerce clause of the Constitution. The court concluded that a rule that defines "waters of the United States" to include those waters the use or degradation of which "could affect" interstate commerce was inconsistent with the Supreme Court's decision in United States v. Lopez, 115 S. Ct. 1624 (1995).

The panel split, however, on whether wetlands connected by groundwater to surface waters were adjacent (and thus regulated) or isolated (and thus not regulated). It also split on whether the sidecasting of material (placing removed soil in a wetland but at some distance from the point of removal such as by the side of an excavated ditch) after draining and ditching wetlands was an "addition" of a pollutant and therefore not regulated under the CWA.

The Wilson decision has immediate ramifications for activities in the Fourth Circuit states: Maryland, Virginia, West Virginia, North Carolina and South Carolina. In response to Wilson, the Corps issued a guidance document stating that it and EPA will continue to assert jurisdiction over isolated wetlands where: (1) either agency can establish an actual (as opposed to potential) link between that wetland and interstate commerce; and (2) individually, or in the aggregate, the use, degradation or destruction of that water will have a substantial effect on interstate commerce. Thus, it appears that the Corps hopes to get around Wilson by documenting a nexus between isolated wetlands and interstate commerce (for example, where isolated waters are used by migratory birds or for recreation by interstate travelers).

Conclusion

These cases are a significant curb on Corps jurisdiction, clarifying that not all development activities in wetlands fall under federal jurisdiction. It is possible that the 106th Congress might intervene and resolve some of these conflictswith new CWA legislation.